Financier Lynn Tilton’s Zohar Funds File for Bankruptcy

March 13, 2018 at 12:05 AM

Lynn Tilton—the flamboyant financier of distressed companies and CEO of Dura Automotive Systems Inc.—has put her controversial Zohar investment funds into Chapter 11 bankruptcy.

She says a Zohar bankruptcy won’t affect Dura Automotive or her two dozen other operating companies.

Tilton has used the three Zohar funds to bundle loans to ailing companies and sell them s collateralized securities. She claims to have used the funds to invest in and revive more than 240 companies since 2000.

Tilton managed the Zohar funds through her Patriarch Partners LLC until relinquishing control in 2016 to the Southfield, Mich.-based restructuring specialists Alvarez & Marsal. The advisory firm concluded that the Zohar funds rather than Tilton herself owned many of her empire’s companies.

The question of ownership spawned lawsuits between with Alvarez & Marsal and MBIA Inc., the controlling creditor for two Zohan funds.

Tilton claims the lawsuits pushed her to seek Chapter 11 protection for the funds as a maneuver to enable her to sell some of her holdings. MBIA and Alvarez & Marsal describe the move as an attempt by Tilton to “retain control of companies she does not own.”

Tilton was cleared in September of fraud charges by the U.S. Securities and Exchange Commission. The SEC claimed she misrepresented the financial health of her companies so that she could charge investors heftier management fees.

Tilton says the Zohar bankruptcy won’t affect Dura Automotive or her two dozen other operating companies.